Look Before You Leap

October 5, 2016

Last week, 20 minutes before the scheduled Commission meeting, the Federal Communications Commission (FCC) postponed a scheduled vote on a proposal intended to create competition in the set-top box marketplace. The FCC Chairman planned to push the item to a vote, even though all the details do not appear to have been fully shared with other offices within the FCC, and they certainly were not made available to the public including advertisers, pay-TV providers, consumer representatives and others that would be significantly affected by the FCC’s proposal.

ANA has been focused on this issue because of its potential major adverse impacts on advertising. As set forth in a two-page fact sheet provided by the Chairman’s office, the FCC seemed poised to consider a proposal that relies on pay-TV providers developing apps which would then be licensed to third parties for use on their own platforms and networks. This sketchy summary also seemed to allow the FCC to be the arbiter of agreements between pay-TV providers and advertisers, determining what would be “reasonable” and taking enforcement action as it saw fit. ANA strenuously objected to this vast expansion of FCC authority, as did others engaged in this proceeding. We cautioned that without specific information it is virtually impossible to assess accurately the potential impacts of this proposal to advertising, programming, and consumer interest.

From the beginning, this proceeding has created a firestorm of concern. The U.S. Copyright Office expressed its strong reservations, along with dozens of members of Congress. At a Senate hearing on the set-top box proceeding, Sen. Claire McCaskill (D-MO) said that she had rarely seen such unanimous criticism of an FCC proposal. Leaders of the Senate and House Committees overseeing the FCC urged that the plan be made immediately available for public review before the FCC acts.

The outcry about the plan reverberated through the private sector. The Motion Picture Association of America, raised strong concerns about copyright infringements and studios losing control over content. Cable companies warned the FCC about the potentially severe consequences of its proposal.

After the vote was postponed last week, nineteen civil rights groups (including the NAACP, National Action Network and others) asked the FCC to lift the “sunshine rule” restrictions imposed by the Chairman (which prohibit outside parties from communicating their views to the FCC) and to release any new plan for public review and comment. Mark Morial of the National Urban League stated that “Chairman Wheeler’s refusal to release the new plan for public comments makes a mockery of the process and violates the most basic principles of transparency.” Morial emphasized that Chairman Wheeler’s “decision to impose rules that silence our voices, while decisions impacting our communities are settled behind closed doors, is unacceptable.”

Amid this growing chorus of opponents, the FCC will continue to debate and revise the plan, hopefully with greater opportunity for public input. It is clear even from the very sketchy outline provided by the FCC that the original set-top box proposal has been substantially modified. Therefore, it’s well past time for the FCC to make the specifics of its proposal available for public review and further comment, and to do so before it advances this matter to a final vote. Advertisers need to be able to assure that the Wheeler proposal permits contractual terms to be honored and enforced, lest existing and new programming be jeopardized through the loss of their financial underpinning. While ANA is agnostic as to the technologies utilized to provide programming, we are thoroughly committed to ensuring that advertising, programming, and consumers’ interests are not materially harmed by the FCC’s STB proposal.

Stay tuned.

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